Lithium War Heats Up After Epic Launch Of Tesla Model 3

The unveiling of Tesla’s Model 3 electric car was no less than the lifting of the final curtain on a game-changing energy revolution. And if we follow that revolution to its core, we arrive at lithium—our new gasoline for which the feeding frenzy has only just begun.

Unveiled just on 31 March and already with 325,000 orders, it seems that the market, too, understands that the Model 3 is more than just another electric vehicle. In one week alone, Tesla has racked up around $14 billion in implied future sales, making it the “biggest one-week launch of any product ever.” (And if you think the “implied future sales” negates the news, think again: Each order requires a $1,000 refundable deposit.)

It will change the world because it is the first hard indication that the tech-driven energy revolution is not only pending, it’s arrived. The Model 3 and its stunning one-week sales success—apparently achieved without advertising or paid endorsements--brings the electric car definitively into the mainstream, and there is no turning back now. Competitors will step up their game and the electric vehicle rush will be in full throttle—so will the war to stake out new lithium deposits. Related: Oil Back On Track As Markets Dismiss Doha

If we reverse engineer the Model 3, we find lithium--the heart and soul of the energy revolution. While everything else is suffering from low prices and a supply glut, lithium is facing the over-charged demand, which opens a huge window of opportunity for new producers.

The Model 3, all by itself, will have a huge impact on lithium demand, which is already threatening to make supply impossible without exploration and production of new resources. At the end of the day, Tesla’s “huge step towards a better future” achieved by fast-tracking “the transition to sustainable transportation” comes down to lithium.

The lithium space is becoming a frantic game of who can get their hands on the choicest new mining acreage and who can launch new production fastest. And in North America, it’s all going down in the state of Nevada, which is the staging ground for a U.S. lithium boom that will feed the manufacturing beasts for everything from EVs, battery gigafactories, powerwalls and energy storage solutions to the long and growing list of consumer electronics that we use every day. Related: OPEC Report Suggests Massive Oil Price Rebound

It is no less than a global scramble to secure new lithium supplies. Even before Tesla unveiled the Model 3 to smashing success, Goldman Sachs was predicting that for every 1% rise in EV market share, lithium demand would rise by 70,000 tons per year, and that overall, the lithium market could triple in size by 2025 just on the back of electric vehicles.

To ensure the success of its electric vehicles, Tesla is building a battery gigafactory just outside of Reno, Nevada, and it’s hoping to have enough lithium to make enough batteries to power 500,000 cars by 2020, according to Fortune magazine. Logically, it’s hoping to be able to source that lithium from Nevada as well, and all the new entrants into the lithium space are hungry to be put on Tesla’s future supplier list. But first they have to get it out of the ground.

According to Malcolm Bell, advisory board member and head of acquisitions for Nevada Energy Metals, Nevada may have a lot of fault traps outside of Clayton Valley with potential lithium deposits “hiding in plain sight”.

“The lithium business is not a flash in the plan; it is here to stay, and I am looking at it like the start of the oil boom in the U.S. when there were oil rigs and derricks nearly every 50 feet,” industry veteran Bell told Oilprice.com. And Nevada Energy Metals understands that lithium is exactly the mineral that is powering our future.

“Thanks to visionaries like Elon Musk, who has turned the transportation industry on its ear, we have a new commodity that looks like it is here to stay. I feel that a lot of people underestimate the green energy movement and the role that Lithium plays in it.”

The electric car is no longer elite. Now it’s for the masses, and the masses will need more lithium than we can currently get our hands on. It’s a wide-scale energy revolution that will end being—in hindsight—the first nail in the coffin for fossil fuels and the heralding of a new era of lithium, the “white petroleum”.

Lithium is far from the most constrained resource in these batteries. I would recommend looking at Cobalt and even Nickel.

ACE814 on April 20 2016 said:

This is all well and good, let's mine Nevada for Lithium with lots of big hydrocarbon using mining equipment. How is it supposed to be a "sustainable" energy solution when lithium, like oil, is a finite commodity? The masses aren't going to buy these electric vehicles until you can recharge them in the same amount of time that you can fill one up with gas. I'm not against EV's at all, but what I hate is when people vilify other forms of energy (like oil & natural gas) that has given them the life of consumption that they have grown to love. We need to use all of our sources of energy together until we can develop something that is truly sustainable and without end.

RussianJew on April 20 2016 said:

Selling car that is not in production yet is the biggest one-week scam ever. Tesla will gobble that cash as all the cash before - and then declare bankruptcy.

Vahan on April 20 2016 said:

We will eventually move on to carbon nanotube batteries when technology makes them cheaper and easier to mass-produce than lithium-based batteries. That's probably not going to happen anyway until lithium mines start drying up.

Mrgoodcat7 on April 20 2016 said:

The current cost of a Tesla Model S which has the ability to go at a top speed of 130 MPH and about 200 miles between charges is anywhere from $70,000 to over $100,000. To charge the battery half way quickly takes about 20 mins at one of the "supercharger stations" set up currently. To get a full charge would take about 45 mins to one hour at one of these stations and the battery starts loosing the ability to hold a charge from the first time that it is used as this is the case with any battery.
A Toyota Corolla has a top speed of about 120 MPH, goes for about 800 miles plus between fill ups and the time to fill the tank is about 5 minutes at the most, all at a cost of $17,000 to $22,000.
Electric cars have a long, long, long way to go to come anywhere near the performance and convenience of even the least expensive gas powered cars.
My point being that this is hardly a "nail in the coffin" of anything.

Ed on April 20 2016 said:

Don't underestimate the power of technology. Today this is still some drawbacks of electrical vehicle, cost, refill time. But as Tesla 3 has shown the gap is shrinking each year. 10 years ago, ppl will laugh at the expensive solar energy, today Solar is economical and comparable to natural gas.

Once the day of electrical car come, it will stay and become the mainstream. And it is no longer in the far future. It is possible within the next 5 years...

harry on April 21 2016 said:

"How is it supposed to be a "sustainable" energy solution when lithium, like oil, is a finite commodity?"

You don't burn the lithium, after a while the battery geometry changes enough that it can't store the same amount of energy, but the Lithium is all still there. It can be recycled and remanufactured into a new battery. Think of it as a tennis ball, after some use it starts bouncing less. But you still have all the tennis ball, and you can reuse the components to build another.

"A Toyota Corolla has a top speed of about 120 MPH, goes for about 800 miles plus between fill ups"
Where can I get one of those? That's one big gas tank at around 35mpg.

Mantom on April 21 2016 said:

Toyota does not get 800+ miles to the tank. but for argument sake, I'll go with it.

One flaw in your assessment is all electric cars must use batteries, utilizing lithium no less. Electric cars are the craze because they provide excellent performance for the buck and have little maintenance requirements. Most EV's have powered electric cars using batteries, but it doesn't have to be the case. Look at www.nanoflowcell.com which has 3 models of car currently in prototype all utilizing electrolyte-chemical fuel cells which produce electricity to power an electric car. The tanks refuel just like gasoline powered cars, but without all the hazardous waste and pollution. If the mileage is to be believed, it is off the charts better than gasoline powered cars.

justin on April 21 2016 said:

"A Toyota Corolla has a top speed of about 120 MPH, goes for about 800 miles plus between fill ups"

I wonder how often one travels 800 miles in one go. My daily commute is just less than 20 miles. And in the rare instances that I do have to do 100 miles, a 1 hour stop over for me is not so bad.

Its the use case that matters.

Titiss on April 21 2016 said:

Mrgoodcat is spot on. Not to mention these EV's batteries and electrical components only last about 40,000 miles before needing replacement which is about 2/3's of the cost of the car. Range is terrible at 200 - 300 miles under ideal conditions ( warm temperatures, not using air conditioning, etc...), and their still really expensive at $35K for the most basic, decent models. Plus charging without a super charger (which cost $1,000,000), or an expensive home upgrade ($20,000 to charge in 12 hours) takes 90 hours out of a standard outlet. Also don't forget Tesla has never made a profit despite billions in government handouts. EV's are 10 years away from being close to competing with gas powered cars on any large scale. Tons of hype, but the reality is there are 88 million gas powered cars sold every year, and less than 1,000,000 EV's even in existence compared to over 1,000,000,000.. Gas powered cars on the roads. Also gasoline engine technology is increasing as well. Ridiculous government mandates are driving EV's, but if we get some adults back in government after this election that can change real quick. Oil and Gas demand will increase through 2040 at least, according to the EIA and IEA. Those are the sources I trust.

Bookdoc on April 22 2016 said:

All well and good but how is it going to handle upstate New York of Vermont in the winter when heat and defrost are needed? I also understand it has heated seats. Isn't that going to contribute to load usage?